Wednesday, July 3, 2013

Dividend Growth Portfolio, June 2013

Past couple of months have been volatile for many dividend growth areas of the stock market. First we got huge corrections, sell offs (whatever you want to call it) in REITs and utilities. That was followed up with a large slide in Canadian telecoms as news broke that Verizon had made an offer to buy Wind Mobile, 1 of 3 failing small Canadian telecom players, and was exploring the possibility of acquiring Mobilicty, another of the 3 failing small players.

A picture is worth a thousand words, so here's 3

The first depicts the massive slide in VNQ, the Vanguard REIT ETF, a 5% one day drubbing followed by a 20 slide before temporarily bottoming in late June.

Next one is XLU, the Utilities SPDR ETF, victim of a 13% sell off, quite a large move for a normally quiet sector.

Friday, June 28, 2013

Take a Deep Breath

Take a deep breath, and think things through before you take any actions.

No seriously, before you take any action on stock market news, step back, inhale deeply, and clear your mind. It will help you see the big picture, and enable you to make better decisions about your investments.

It is very easy to get caught up in what's on TV, or what is in the newspaper.

The Last Month

May 22, 2013: S&P closes down 35 handles from intraday peak. -14 points from previous day's close

May 28, 2013: S&P 500 rallies 25 pts intraday before closing up only 11 pts

May 31, 2013: S&P 500 closes down 24 pts, with most of that (13 pts) coming in the last 30 minutes of trading

Monday, June 10, 2013

Dividend Growth Portfolio, May 2013

A bit delayed, but better late than never right?

Every time I go on vacation, I get reminded of how my brain seems to be wired to think about investing. Even when I'm vacationing, I can't help but think of things I observe in a financial sense. I guess the phrase 'Money never sleeps' really is true.

Here is a couple of sample pictures from my trip. The first is part way through my 6 hour hike down the South Kaibab Trail into the Grand Canyon.

The second picture is a tail shot of the Space Shuttle Endeavor at the California Science Center.

A few things I noticed or thought about on this trip:

  1. Americans love American cars: Here in the Greater Toronto Area, German and Japanese import cars like Benz, BMW, Audi, Toyota/Lexus, Honda/Acura, Nissan/Infiniti are everywhere. During my 2000+ mile drive thru Las Vegas, Grand Canyon, Death Valley, and Los Angeles, these import car brands were extremely rare. I almost want to say I see more of them in 1 day in Toronto/Markham, than I did in my entire 10 day 2000+ miles trip. What did I see a lot of? Dodge, Chevy, Ford, Cadillac, Lincoln, etc. 
  2. South Korean cars are really poorly made, American cars are not bad: The crappy quality of both Hyundai cars I got as rentals (Santa Fe and Elantra) astounded me. Poor sound proofing, inconvenient placement of controls, and weak engine were 3 of many things that I did not like on the Hyundai vehicles. The Dodge Charger I drove from Vegas to LA via Death Valley was much more enjoyable, and not to mention very fuel efficient!! This reinforces my belief that Hyundai cars are overrated. 
  3. Freeways in LA really suck: I couldn't believe how TERRIBLE the freeways in LA were in terms of road quality. I felt like I was driving over speed bumps at 75mph! I still can't get the ka-thump ka-thump ka-thump out of my head. Infrastructure investment is truly important. America needs to repair its roads and bridges!
  4. US McDonalds has a lot more variety than Canadian McDonalds: Egg White McMuffin! I hope they bring it to Canada. It was delicious, the same price as normal McMuffin, and in theory healthier for you. McDonalds is truly an innovation leader when it comes to quick serve food. They also have more burger selections (Deluxe, BLT, etc) than we do up here. I saw a lot of customers having breakfast and coffee at the various McD I visited throughout the trip. It looks like McDonalds is really having a lot of success at getting into the breakfast and coffee markets
  5. Americans really do eat A LOT: I swear American sized portions are even too big for me. No wonder I saw so many obese (not just mildly, but to the point their tummies flop on the tables) people on this trip. Made me think of investing more in healthcare businesses. 

now, onto regular business :)

Thursday, May 2, 2013

Dividend Growth Portfolio, April 2013

The stock market is soaring to new highs. Chasing yield is the new fad, like dotcoms around the turn of the century, and housing in 2005-2007. People are buying dividend paying equities without adequate research, believing that getting paid 10% somehow is a good return for low risk. On top of this, good securities are getting bid up, thus driving yields broadly lower. REITs are yielding where utilities used to be. Utilities are yielding where out-of-favor stocks used to be, etc.

As a dividend growth investor, I do invest in higher yielding assets, but my strategy does not revolve around absolute yield. Historical data shows the highest yielding equities do not even have average performance, let alone best. At best, yield chasing yields mediocre returns. At worst, its odds are not much better than roulette.

Where do I see the best value at the moment? I've mentioned these in the past, but I still continue to see good value in the defense and health care insurance industries. To add to those, now I also see attractive value propositions in energy and financials.

At these levels, be careful when committing new money. Buy in increments, and keep some cash on hand, continue to look for opportunities.

Sunday, April 28, 2013

Portfolio for Beginners

The hardest step of doing anything is getting started.

When I talk to various people (friends, co-workers, people on the internet), they often say 'I would love to invest and grow my wealth, but I have no idea how or where to start!'. Its true. While the concept of investing or why you should invest, is not a hard one to grasp, or a hard one to accept, many people get stuck on how to begin doing it. To an outsider, the world of investments often looks at best confusing, and at worst, scary. So many investments to choose from, where do I start?  What makes the process of getting started even more difficult, is that beginner investors often have a fear of seeing paper losses.

Today's your lucky day. I'm going to help you get started with a portfolio for beginners. I will even track it over time to see how you would have done, had you actually followed through on it.

First, let's set some rules, or guidelines, regarding portfolio management.

Friday, April 5, 2013

New Pages!

decided to add more content to the blog

First up, an section about us/me

Next, a section of various interesting things I've come across on the web, that may have some practical use for you
Around the Web

To come, a section for investors, detailing my historical returns vs various benchmarks
Open to more ideas, both investing related and non-investing related.

thanks for reading!

Friday, March 29, 2013

Dividend Growth Portfolio, March 2013

Well after all that excitement in the first 2 months, March was certainly boring. No new purchases, no sales. I did receive a bigger than expected dividend hike from JP Morgan, although I was disappointed Citigroup did not move its dividend at all. The share buyback announcement was good, considering how far below tangible book the shares are trading at, even vs its peers, but I wanted a dividend hike!

How cheap are Citigroup (assuming economy continues to recover) and Bank of America vs its peers and Canada's big 3?

Monday, March 25, 2013

Yield on Cost, the Big Picture

Sometimes, it's easy to feel after so much hard work each year, our investment portfolios are barely going anywhere. This feeling is amplified when you look forwards and back and see how far you are from your goals.

Yield on cost is a good way for dividend growth investors to see meaningful fruits from their labor, as well as track their progress.

If you're unfamiliar with the term 'yield on cost', it simply means the current dividend yield based on your original cost of investment. It is simply the annual dividend divided by your original per share cost.

Here are some yield on costs for investments from several years ago:

Sunday, March 3, 2013

Dividend Growth Portfolio, February 2013

Wow what a year 2013 has been so far. January and February have delivered solid returns for investors. To some degree, it actually scares me how well the stock market has performed. I fear that the exuberance may be too much too soon, perhaps even... irrational?

Nonetheless, it is very difficult, if not impossible, to determine where the market is headed in the short to medium term. What is clear, however, is that we are at or nearing levels unseen since 2007. Levels that also marked a market top in 2000. That should worry you, at least a little bit. Below is a 40 year chart of the S&P 500, and the triple top forming from 1999 to 2013 is quite obvious in the graph.

Friday, March 1, 2013

Sowing the Seeds For Your Dividend Growth Portfolio

A dividend growth portfolio is a lot like an orchard. First you have to plant the seeds.

Then you have to be patient, and take good care of your saplings & young trees.
Eventually the mature trees will bear fruit for you for many years.

Tuesday, February 5, 2013

Dividend Growth Portfolio, January 2013

New year! New beginnings! Time to re-evaluate the portfolio. One of my goals in 2013 is to drive more dividend growth while maintaining current yield levels.

Dividend growth investment opportunities are essentially split into 4 categories.
1. Low current yield + low dividend growth
2. High current yield + low dividend growth
3. Low current yield + high dividend growth
4. High current yield + high dividend growth

I've ordered these from least preferable to most preferable in terms of long term total returns. This basically means I need to reduce investments that fall into first two categories, in favor of ones that fall into categories 3 and 4. These kind of investments are truly the gems.

By following me as I update my portfolio activity and dividend status each month, you can see how I execute my strategy to achieve that goal. In 2012, my portfolio had intrinsic dividend growth of 12%. I aim to beat that in 2013.

New Purchases
General Dynamics - $183.60
Scotiabank - $4.56 (DRIP reinvested shares)

3M - $106.20

Saturday, January 26, 2013

S&P 500 Rallies to Levels Unseen Since 2007

Its now been more than 5 years since we've seen these levels in the Dow and S&P 500 indices. Not coincidentally, bond yields and the VIX have also reached 5 year highs and 5 year lows, respectively.

Recent data shows bond funds are experiencing the highest outflows, and equity funds experiencing the highest inflows, in years. Is this the beginning of a shift to equities, or is this another case of the retail investor getting back in near market tops?

Sunday, January 13, 2013

Dividend Growth Portfolio, December and FY2012

We're well into the 2013 year now, and I've been neglecting my blog... Hopefully as January rolls by I will have more time to dedicate towards informative or update posts.

December (and early January) brought a flurry of activity for me. Some of it was fiscal cliff risk driven, and some of it was simple top ups or just taking advantage of dwindling market opportunities. Let me list my transactions for the month, then I'll go over them.

New Purchases
Coca Cola - $56.10
Kinder Morgan Inc - $72
CSX - $70

New Transfers In
Fidelity Spartan 500 Index Fund - $84.82

Western Union - $87.50

Intrinsic Dividend Changes
Boeing - $25.56 (quarterly dividend increase 10.2% from 44 cents to 48.5 cents)

November 2012 Annualized Dividend: $4237.20

+ $198.10 (from new purchases)
+   $84.82 (from new transfers in)
-    $87.50 (from sales)
+ $25.56 (from intrinsic changes)

December 2012 Annualized Dividend: $4458.18
End of 2012 Goal: $3800 to $4000
Whisper Goal: $4400